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28 April 2020
Accounts Press Conference /Analysts‘ Meeting
GESCO – Accounts press conference - 28 April 2020
GESCO
Intro
2
from the technology-driven German „Mittelstand“
Hidden Champions
… in one share
GESCO – Accounts press conference - 28 April 2020 3
Agenda
Strategy NEXT LEVEL Excellence Programmes
GESCO on the
stock market
Appendix
Business model
0 1 0 2 0 3
M & A
0 4Abbreviated financial year
2019
0 5 0 6
Financial year 2020
0 7 0 8
GESCO – Accounts press conference - 28 April 2020
01 Business model
GESCO – Accounts press conference - 28 April 2020
GESCO – The Industrial Group
▌18 operating subsidiaries, growing internationallly, under the roof of GESCO AG
▌ Flexible, operationally independent companies that benefit from being part of a strong group
▌ Innovative technology „Made in Germany“ for global markets
GESCO
Group
GESCO
AG ▌ Acquisition and development of industrial SMEs on
a long-term basis, ▌ Majority acquisitions, generally 100 %, mostly as succession arrangements
▌ Managers can acquire stake of up to 20 % in their company
Hidden Champions des technologie-getriebenen deutschen Mittelstands in einer Aktie
5
01 Business model
Industrial SMEs including market and technology leaders
Long-term investor and safe haven for succession solutions
Hidden Champions from the „Mittelstand“ in one share
GESCO – Accounts press conference - 28 April 2020
GESCO – The Industrial Group
01 Geschäftsmodell
Hidden Champions des technologie-getriebenen deutschen Mittelstands in einer Aktie
6
01 Business model
Technologies
Production processDynamically growing markets, high
degree of innovation,
Robotics and automation solutions in machine and plant construction
Health & InfrastructureStable markets, relatively resilient
to economic cycle
Modules, componentsand perishable goods
RessourceConsolidating markets, focus on niches and customer service
Customised preparation of primary materials, loading equipment forgases and liquids
Tools and moulds, components, parts etc. for vehicle industry
Currently strategic shifts, market development unclear and challenging
Mobility
end-market oriented segments
GESCO – Accounts press conference - 28 April 2020
02 StrategyNEXT LEVEL
GESCO – Accounts press conference - 28 April 2020
GESCO – the Vision
8
02 Strategy NEXT LEVEL
▌ All companies are Hidden Champions or well on track to becoming Hidden Champions
▌ Well-balanced, robust and resilient portfoliowith three core holdings and basic holdings of substantial size
▌ Strong corporate culture, attracting employees, offering them room for development, resulting in High Performance teams
▌ Well established Excellence Programmes
an attractive goal
GESCO – Accounts press conference - 28 April 2020
The strategy
9
02 Strategy NEXT LEVEL
a holistic concept
EN
TX
P O R T F O L I O
A R C H I T E C T U R E
H I D D E N
C H A M P I O N S
M & A| Buy bigger companies
| Stronger focus on add - ons
| Optimise processes
| Intensify direct approach
PROGRAMMESCANVAS - Business Model |
MAPEX |
OPEX |
LEADEX |
E
TX
NHOLDING
Analyse the portfolio
Encourage visionsto achieve next levels
Strengthen corporate cultureand team spirit
Add skills in terms of methods and know-how
GESCO – Accounts press conference - 28 April 2020
03 Excellence Programmes
GESCO – Accounts press conference - 28 April 2020
Market and Product Excellence MAPEX
Analysis of customer segments, product offerings, customer channels and relationships. New ideas
for product portfolio and market position
Expand market shares, tackle new market
segments, develop product innovations
Leadership Excellence LEADEX
Sharpen leadership skills in a dynamic environment,
support attractivity as employer
Promote and develop executives,strengthen corporate culture
OPEX Operational Excellence
Analysis of the value added processes, in particular the parameters quality, lead time and delivery performance as well as cost structures
Increase efficiency and margins
CANVAS Business model analysis
Upstream workshops for a holistic analysis of the respective business model
Create a common understanding in the management team, identify development potentials
11
03 Excellence Programmes
Systematic and adjusted process
The elements
GESCO – Accounts press conference - 28 April 2020
The targets
12
03 Excellence Programmes
clearly measurable
OperationalExcellence
Market andProductExcellence
9 – 12 months lead time before effectiveness
3 %p. a.
3 %p. a.
Sales per employeegrows by
Sales growsabove market by
Target margin8 – 10%
p. a.EBIT
12 – 24 months lead time before effectiveness
Throughout the economic cyle
GESCO – Accounts press conference - 28 April 2020
Our schedule
GESCO auf die nächste Ebene entwickeln
13
HUBL
Sommer & Strassburger
DÖMER
MAE Group
Frank Group
Pickhardt & Gerlach Group
Dörrenberg Group
C.F.K.
Paul Beier
Modell Technik
AstroPlast
Georg Kesel Group
SVT
2019 2020
OPEX Analysis OPEX Implementation
OPEX Analysis OPEX Implementation
OPEX-Analyse OPEX Implementation
MAPEX Analysis MAPEX Implementation
MAPEX Analysis MAPEX Implementation
MAPEX Analysis MAPEX Implementation
MAPEX Analysis
MAPEX Analysis
1) postponed due to Corona
1)
MAY JUN JUL AUG SEP OCT DEC FEB MAR APR MAY JUNNOV JAN
1)
1)
03 Excellence Programmes
Hidden Champions are being created
GESCO – Accounts press conference - 28 April 2020
Highlights 2019
14
03 Excellence Programmes
O P E X
Sommer & Strassburger improves delivery reliabilityto > 90 %and increases margin
M A P E X
Pickhardt & Gerlachdevelops
new branding conceptand enters new markets
I N N O V A T I O N
FRANK Groupwinsinnovation award of Agritechnicafor sensor system mower units
E X P A N S I O N
Setter Group opens
two new plants and furtherincreases sales by 45 %
Fundament for profitable growth
GESCO – Accounts press conference - 28 April 2020
04 M&Afurther
GESCO – Accounts press conference - 28 April 2020 16
04 M & A
Readjusted
Directed towards target portfolio
Network
still generatesgood dealflow
Direct approach
selected targets basedon own market analysis
Target profile
Sales of€ 20 mn € to € 100 mnfor direct investments
Add - ons
with strategic added value for existing companies
from € 5 mn sales
GESCO
Always looking forHidden Champions
GESCO – Accounts press conference - 28 April 2020
Produktionsprozess Ressourcen Gesundheit und Infrastruktur Mobilität
IST
17
04 M & A
Portfolio Architecture
balanced and resilient
Target
3 core holdingwith different end markets
several basic holdingswith substantial sales and earnings contribution
GESCO – Accounts press conference - 28 April 2020
05 Abbreviatedfinancial year 2019
GESCO – Accounts press conference - 28 April 2020
Change of financial year
19
05 Abbreviated financial year 2019
Resolution of AGM on 29.08.2019
MFJDNOSAJJMAMFJDNO…
DNOSAJJMAMFJDNO…
GESCO AG
subsidiaries
as reported
OSAJJMAMFJDNOSAJJMA DN
OSAJJMAMFJDNOSAJJMA DN
MFJDNOSAJJMA
DNOSAJJMA MFJ
GESCO AG
subsidiaries
financial year2020
abbreviated FY01.04 – 31.12.20193
1.1
2.2
01
7
31
.03
.20
18
31
.12
.20
18
31
.03
.20
19
31
.12
.20
19
31
.12
.20
20
*) adjustment according to IAS 8 due to deficiency finding
of FREP with regard to Group accounts 31.03.2018
adjusted *)
GESCO – Accounts press conference - 28 April 2020
The environment 2019
20
05 Abbreviated financial year 2019
Subdued environment
German economy
• GDP expected : +0.5 %
• GDP actual: +0,6 %
• Consumption als trigger
Investment goods industry
VDMA expectation for production:
• Initially: 1 % growth
• From July 2019: 2 % decline
• Actual: 2.8 % decline
Automotive
• OEMs and large suppliers arestill reluctant to invest
• High uncertainty due to shifts in automotive industry
Margins under pressure
• Decreasing demand
• Increasing pressure from competition
• Customers focus on prices
GESCO – Accounts press conference - 28 April 2020 21
Ord. int. 62.0 93.2
Sales 76.4 87.5
EBIT 7.7 8.1
EBIT margin 10.1 % 9.3 %
Ord int. 200.1 289.2
Sales 211.4 287.2
EBIT 17.9 31.8
EBIT margin 8.5 % 11.1 %
Ord. Int. 108.5 161.2
Sales 112.7 145.2
EBIT 8.3 14.3
EBIT margin 7.3 % 9.9 %
Ord. int. 32.5 59.3
Sales 39.5 61.0
EBIT -2.1 2.1
EBIT margin -5.4 % 3.4 %
05 Abbreviated financial year 2019
Heterogeneous picture
Ressource Technology
Health & Infrastructure Technology
MobilitätyTechnology
ProductionProcessTechnology
Demand in automotive declining Based on calendar year order intake slightly decreasing, sales and earnings increasing due to acquisition
Environment extremely difficult; significant decline in order intake, earnings under considerable pressure from restructuring
Based on calendar year order intake almostunchanged, sales increasing, margindecreasing
Based on calendar year order intake and sales slightly decreasing, earnings and margin below last year’s record figures due to economic environment
Abbreviated FY 2019 (9 months)
2018/2019 adjusted
(12 months)
Segment development
GESCO – Accounts press conference - 28 April 2020
Key figures
22
Abbreviated FY2019 (9 months)
2018 / 2019(12 monthy)
Adjusted
Order intake / € million 403.2 602.9
Group sales / € million 439.6 580.3
EBITDA / € million 44.0 68.4
EBIT / € million 23.5 42.1
Group net income after minorityinterest / € million 12.4 22.6
Earnings per share acc. to IFRS / € 1.14 2.08
Staff / No at reporting date 2,718 2,684
Investments in tangible assets / € million 15.8 23.3
Decline in demand mainly in automotive and investment goods
EBIT margin 5.3 % (prev. year 7.3 %) Effect IFRS 16: € +0.1 million
Staff adjustments mainly visible from beginning of 2020 on; staff increase at Setter, staff decrease mainly in Mobility segment
Focus: new machinery at Setter Group domestic and abroad, new production hall at VWH; reporting year incl. € 1.7 million due to IFRS 16
05 Abbreviated financial year 2019
Based on calender year sales slightly increasing
EBITDA margin 10.0 % (prev. year 11.8 %) Effect IFRS 16: € +2.5 million
Corresponds to outlook from Nov. 2019
GESCO – Accounts press conference - 28 April 2020
Key figures Cash flow
23
AbbreviatedFY 2019
(9 months)
2018 / 2019(12 months)
Adjusted
Result for the period / € mn 13.7 25.8
Cash flow for the year / € mn 34.0 51.6
Operating cash flow / € mn 38.6 13.7
Cash flow from investment activities / € mn -13.8 -41.3
Cash flow from financing activities / € mn -23.2 9.1
Net change in cash and cash equivalents / € mn 1,534 -18,473
Cash and cash equivalents on 01.04. / € mn 29.3 47.8
Cash and cash equivalents on 31.12. and 31.03. / € mn 30.9 29.3
05 Abbreviated financial year 2019
Improvement in operating cash flow
In reporting year slight decrease, in prev. year clear increase in working capital
Solid amount of cash
In reporting year incl. depreciation on rights of use (€ 3.3 mn) for the first time
Prev. year included company acquisition
In reporting year reduction of net cash € -7.0 mn and repayment of lease liabilities (IFRS 16) of € -3.2 mn
GESCO – Accounts press conference - 28 April 2020
Key figures balance sheet
24
Assets Liabilities
30
102
178
215
31
97
151
227
145
111
250
158
117
250
31.03.2019adjusted
31.12.2019 31.12.2019 31.03.2019adjusted
Sufficient liquid funds
Non-current assets
Inventories
Receivables andother assets
Liquid funds
Equity
Non-current liabilities
Current liabilities
0
100
200
300
400
500
600
+ € 15 mn from new IFRS 16 accounting Equity ratio
49.5 %
in € mn
05 Abbreviated financial year 2019
+ € 15 mnlease
liabilities due to IFRS 16
525 525506 506
Working capital reduction € 12 mn
Solid balance sheet ratios, full capability to act
Net bank debt to EBITDA on annualized basis 1.8
(adjusted previous year 1.6)
GESCO – Accounts press conference - 28 April 2020
06 GESCOon the stock market
GESCO – Accounts press conference - 28 April 2020
GESCO share
26
GESCO AG (incl. dividends) vs. SDAX
01.04.2019 31.03.2020
SDAX
GESCO AG100%
06 GESCO on the stock market
Price decoupled from SDAX since Nov. 2019
End of financial year31.12.2019
GESCO – Accounts press conference - 28 April 2020
Dividend
27
06 GESCO on the stock market
Dividend policy OLD
Distribution ratio approx. 40 % of Group
net income after minority interest
Dividend policy NEW
• 20 % to 60 % of Group net income
after minority interest
• Higher flexibility, especially with regard
to the implementation of the M&A
strategy of NEXT LEVEL
• In phases of strong earnings and cash
flows distributions significantly above
recent level
Dividend proposal for 2019
• Due to the Corona crisis, application
of the new policy was brought forward
• Proposal of € 0.23 / share corresponds
to lower end of range
• Dividend proposal is subject to the
further development of the corona
pandemic
• AGM to be held on 18.06.2020
as virtual AGM
Higher flexibility
GESCO – Accounts press conference - 28 April 2020
Shareholder structure
28
13.7 % Stefan Heimöller
71.5 % Freefloat(acc. to definition ofDeutsche Börse)
rd. 32.7 % otherinvestors
rd. 32.7 % other institutionalinvestors
3.0 % LGT Capital Partners Ltd.
3.1 % LBBW Asset Management Investmentgesellschaft mbH
14.8 % Investmentaktiengesellschaft für langfristige Investoren TGV
06 GESCO on the stock market
Shareholder structure essentially unchanged
GESCO – Accounts press conference - 28 April 2020
07 Financial year 2020
GESCO – Accounts press conference - 28 April 2020
Dominated by the pandemic
30
07 Financial year 2020
Consequences with delay
German economy
Extrem degree of uncertainty
Outlook depends on duration of
lockdowns
IfW: GDP -4.5 % to -9.0 % (19.03.2020)
Investment goods industry
VDMA reduced expectation for
production from -2 % to -5 % on
12.03.2020, stressed uncertainty
Automotive
Situation already difficult due to shifts,
exacerbated by pandemic
Sales already weak in 2019,
now worldwide slump in sales
GESCO Group: measures
Measures to protect staff and business
partners started immediately
Contact to customers and partners
maintained as far as possible, close
dialogue
GESCO Group: customers
Shutdowns at OEMs for several weaks
Situation complicates orders for
investment goods
GESCO Group: status of production
Supply chains mainly inact, no shutdowns
due to lack of supply
Beginning of 2020 state-ordered
shutdowns in China, currently in one
company in the USa
GESCO – Accounts press conference - 28 April 2020
Our approach
31
07 Financial year 2020
keep on working consistently
Target 1
We want to cope with the crisis in good
health - each one of us personally, we as a
group economically
Target 3
As a group we want to emerge
strengthened from the crisis
Target 2
We want to strengthen partnerships in the
crisis - through fair cooperation both
internally and externally
Basis: Solid financials
€ 30 mn cash, approx. 50 % equity ratio in
the Group, broadly diversified debt
Subsidiaries generally with solid financials
Basis: SME character
Agile operating units, decentralized
decision making, quick implementation
Basis: Strategy NEXT LEVEL
Moves in the right direction, suppors in
overcoming the crisis
GESCO – Accounts press conference - 28 April 2020
Preliminary figures Q1 (01.01. - 31.03.2020)
32
Financial year2020
Financial year2019
adjusted
Order intake / € million approx. 136 156.9
Group sales / € million approx. 129 145.8
Group net income after minority interest / € million approx. 0.4 4.0
07 Financial year 2020
Publication of figures Q1: 29.05.2020
Decline in demand results in lower order intake
Production process technology still EBIT negative; production of machines started which will only haveimpact on sales and earnings later in the year
Ressource technoloy with declining margin; orders in project business contribute sales and earnings only laterin the year
Health and infrastructure technology with stable earnings
Mobility technology EBIT negativ
GESCO – Accounts press conference - 28 April 2020
Segment outlook for the full year
33
Ressource Technology
Health & InfrastructureTechnology
Mobility Technology
ProductionProcessTechnology
07 Financial year 2020
Corona exacerbates the economic downturn
Declining sales in mechanical and plant engineering, margins under pressure; growth in stainless steel processing
Environment deteriorates further, revenue declines, losses increase, negative EBIT in the full year
Overall positive development, earnings grow disproportionately
Tool steel with decline in sales and earnings, strip steel stable, margin improvement in loading technology
SALES
EBIT
SALES
EBIT
SALES
EBIT
SALES
EBIT
GESCO – Accounts press conference - 28 April 2020
Group outlook
34
(Outlook before M & A / changes to scope of consolidation)
Financial year2020
Abbreviated FY2019
(9 months)
Group sales / € million 540 – 560 439,6
Group net income after minority interest / € million 8 – 11 12,4
07 Financial year 2020
a difficult year, but manageable
Expectations may change significantly at short notice in light of the dynamic development of the Corona pandemic.
GESCO – Accounts press conference - 28 April 2020
08 Appendix
GESCO – Accounts press conference - 28 April 2020
GESCO – group overview
Hidden Champions des technologie-getriebenen deutschen Mittelstands in einer Aktie
36
Company Sales 2019€‘000
Staffas at 31.12.2019
GESCO AGShareholding
MAE Group 37,875 218 100%
Sommer & Strassburger GmbH & Co. KG 20,753 144 100%
VWH GmbH 16,977 129 80%
Georg Kesel Group 12,596 60 90%
C.F.K. CNC-Fertigungstechnik Kriftel GmbH 7,177 60 80%
Dörrenberg Group 204,862 527 90%
SVT GmbH 44,768 177 100%
Pickhardt & Gerlach Group 31,268 45 100%
Setter Group 50,435 180 100%
Frank Group 37,434 336 90%
Franz Funke Zerspanungstechnik GmbH & Co. KG 20,285 95 100%
Hubl GmbH 16,356 118 80%
Haseke GmbH & Co. KG 14,404 81 80%
AstroPlast Kunststofftechnik GmbH & Co. KG 13,550 90 100%
Werkzeugbau Laichingen Group 21,469 173 100%
Dömer GmbH & Co. KG Stanz- und Umformtechnologie 17,286 96 100%
Modell Technik Formenbau GmbH 10,356 107 100%
Paul Beier GmbH & Co. KG 8,548 63 100%
ResourceTechnology
Health & Infrastructure Technology
Mobility Technology
ProductionProcessTechnology
08 Appendix
GESCO – Accounts press conference - 28 April 2020
Facts and Figures
37
Stock markets
Xetra; Frankfurt (regulated market);Berlin, Düsseldorf, Hamburg/Hannover, München, Stuttgart (open market)
Sec. identification number A1K020
ISIN DE000A1K0201
IPO 24.03.1998
End of financial year 31 December
Designated sponsorsM.M. Warburg & CO,Pareto Securities AS
Share capital
10,839,499 €
Shares
10,839,499
71.5 %Freefloat
Founded
1989
08 Appendix
GESCO – Accounts press conference - 28 April 2020
Financial Calendar
38
29 May 2020Q1 figures
18 June 2020Annual General Meeting
(online)
31 August 2020Q2 figures
27 April 2021Annual Accounts Press
Conference / Analysts‘ Meeting
May 2021Q1 figures
30 June 2021Annual General Meeting,
Wuppertal
2020
2021
08 Appendix
30 Nov. 2020Q3 figures
GESCO AG
Investor Relations
Johannisberg 7
42103 Wuppertal
Germany
Phone +49 202 24820-18
Fax +49 202 24820-49
39
Shareholder contact
08 Appendix